What caught my eye this week.
I mentioned the other day that I’m getting increasingly grumpy about the supposed victims of financial misdeeds seeking redress for shooting themselves in the foot.
Not a popular stance for a personal finance blogger to take, but the truth.
Paul Lewis for instance on Radio 4’s MoneyBox reliably turns me to the Dark Side like a neophyte Sith Lord as he rails against – oh, I don’t know – Tesco having the temerity to sell apples at ‘rip-off’ prices of more than what it paid for them.
A more serious example came this week in the Financial Times [Search result] in an article about interest-only mortgages.
The FT is not the first publication to warn of a looming crisis from interest-only mortgages. The charge is that borrowers have not saved up enough money to repay the capital at the end of the term.
And to be fair, the FT didn’t quite headline the mis-selling angle in this piece, though it did raise the juicy prospect.
But a victim narrative was certainly foreshadowed in the angle it took and the quotes it used.
The article led by painting a picture of a son being denied the inheritance of the family home because of his mother’s decision to take out an interest-only mortgage:
Linda needs to have a difficult conversation with her son. The expectation was that one day, he would inherit the family home in London where she still lives. But her decision to take out an interest-only mortgage of £182,000 nearly a decade ago has effectively cost him his inheritance.
I don’t know Linda’s circumstances, obviously, but from as much as we can tell here it was her decision not to save up to repay “a penny of the underlying debt” that has cost him his inheritance.
Alternatively, if she would never have been able to find the money to pay for what she bought, then she shouldn’t expect to own it.
That’s not a scandal. That’s shopping.
Later on we have Gary, who claims “we didn’t have things explained to us”. This might point a way forward to the sort of compensation windfall enjoyed by the PPI-paying masses, except that Gary immediately adds “Anyway, our hands were kind of tied at the time — it was more or less our only option.”
I don’t mean to dismiss the issues faced by these people, or make fun of them; I’m sure they have their worries. But they are in the victim role as portrayed by the FT, and it’s a role that needs to be challenged.
Why not a piece saying that the rest of the banks’ customers or shareholders – or the State – will need to bail out these kinds of individuals if they’re not to be turfed from their homes entirely because of their own decisions? Somebody always pays.
As for mis-selling, happily this kind of mortgage’s purpose is made pretty clear in the name itself.
We’re not talking about a Property Financing Multi-Year Upkeep and Retention Vehicle, or some other financial nonsense.
It is an Interest-Only mortgage. As in – slowly now – you only pay the interest.
The FCA is avoiding the elephant in the room – Monevator
Global tracker discussion sprang to life this week [Note: “Next Comments”] – Monevator
From the archive-ator: Know your own risk tolerance – Monevator
Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1
UK state pension age rise brought forward by one year – BBC
Global shift into alternative assets gathers pace [Search result] – FT
House price growth continues to slow, especially in London – Telegraph
US tech sector passes its dotcom era peak [Search result] – FT
Online fund platforms surge in popularity [Search result] – FT
Products and services
Atom Bank’s 5-year fixed rate mortgage charges just 1.59%; remortgages only – ThisIsMoney
Fixed-rate savings bonds’ interest rates rise 36% since January – Telegraph
Nationwide pulls insurance for cyclists who won’t wear helmets abroad – Telegraph
All charges for paying by debit and credit cards to be banned – Guardian
Comment and opinion
Why index funds are one of the 50 things that made the modern economy [Podcast] – BBC
Costs are a key part of the investing equation, but so is time frame – The Value Perspective
What’s your track record? – A Wealth of Common Sense
You probably don’t have what it takes to beat the market – MarketWatch
What does an investment portfolio need? – Oblivious Investor
Betting on things that never change – Morgan Housel
Finding the active in low-cost passive investing – Barry Ritholz
A recipe for disastrous stock picking returns – Investing Caffeine
Why Josh Brown bought his first Bitcoin – The Reformed Broker
Thoughts on 20 years in work […in finance, but universal] – Principles and Interest
Retirement dread is replacing the American dream – Bloomberg
The real value of a financial advisor [US but relevant] – The Backcourt Report
Todd Wenning on competitive advantages and moats – Compounding Snowballs
Off our beat
The battle for the moon begins – Bloomberg
Boring Elon Musk update – Bloomberg
“The conventional investor is in awe of those who have a deep understanding of ‘what the market thinks’. He should be: he is typically paying enough for the privilege.”
– John Kay, The Long and the Short of It
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]